In three months, U.S. national debt increased by $677 billion.

Kabir903

The U.S. government has just increased its balance sheet by over $5 trillion in three months.

According to data from the Treasury Department's Penny Database, national debt rose from $33.896 trillion on December 27 to $34.573 trillion on March 27, an increase of $677 billion.
The CEO of BlackRock, the world's largest asset management company, stated that the continuously growing debt is significant.

In a new letter to shareholders, Larry Fink analyzed the state of America's balance sheet.

"In the United States, the situation is more urgent than I remember. Since the beginning of the pandemic, the U.S. has issued about $11.1 trillion in new debt, and that's just a portion of it. There are still interest payments that the Treasury Department needs to make. Three years ago, the interest rate on 10-year U.S. Treasury bonds was less than 1%. But as I write this, it's over 4%, and a 3% increase is very dangerous. If current rates persist, an additional $1 trillion in interest will be paid over the next decade.

Why is debt a problem now? Because historically, the U.S. has financed new debt by issuing bonds to retire old debt. As long as people wanted to buy these securities, it was a viable strategy, but looking ahead, the U.S. can't assume investors will want to buy these securities at current quantities or premiums. Today, about 30% of U.S. debt is held by foreign governments or investors. As more countries establish their own capital markets and invest domestically, this proportion may decline.

Fink believes that the ever-expanding debt poses a real threat to the country's fiscal future.

"More leaders should be concerned about America's snowballing debt. A worrisome scenario is that the U.S. economy starts to resemble Japan at the end of the 1990s and the beginning of the 21st century, when debt exceeded GDP, leading to a period of contraction and stagnation.

A heavily indebted America will also find it harder to combat inflation, as monetary policymakers won't be able to raise rates significantly without greatly increasing already unsustainable debt service bills.

Despite the worrying trajectory, Fink suggests that a debt crisis is not inevitable.

"While fiscal discipline helps to curb marginal debt, raising taxes or cutting spending to levels required for significant debt reduction in the U.S. (either politically or mathematically) will be very difficult. But besides taxation or cuts, there's another way out, and that's growth. If the U.S. GDP averages 3% growth over the next five years (in real terms, not nominal), then the U.S. debt-to-GDP ratio will remain at 120% — high, but reasonable."

I should be clear: a 3% growth rate is a very tall order, especially considering the aging workforce of the country. This will require policymakers to shift their focus. We can no longer see debt as a problem solvable only through taxation and spending cuts. Instead, America's debt efforts must center on policies conducive to growth, including utilizing one of the best growth catalysts: infrastructure. Especially energy infrastructure.

Jiger955

This time, there has been a significant increase indeed.